Procurement Procedure in SSA

PART - I

(i) Introduction
(a) Main Considerations
(b) Objectives of Effective Procurement
(c) Procurement in SSA
(ii) Financial Ceiling
(iii) Levels of Procurement
(iv) Procurement Plan

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PROCUREMENT

Main
Considerations

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 Main Considerations of Proficient
Procurement
(i) Economy: Give the purchaser best value for money.

(ii) Efficiency: Best procurement is simple and swift, producing positive

results without protracted delays.

(iii) Fairness: Impartial, consistent, and therefore reliable.

(iv) Transparency: Maintains rules and procedures that are accessible

and unambiguous. It is not only fair, but should be seen to be fair.

(v) Accountability and Ethical Standards: A key deterrent to collusion

and corruption, and a key prerequisite for procurement credibility.

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 Why is Procurement Important?
In procurement terms inputs are generally grouped into three
categories:
(i) Civil Works School Infrastructure and facilities like New
PS, UPS, Residential Schools, Hostel, ACR, HM Room,
BRC/URC, CRC, Drinking water, Toilets, Girls Toilet, Ramps,
Handrail, Electrification, Retro-fitting, Boundary wall/ fencing,
Major Repairs, etc.
(ii) Goods - Typically equipment, computers, furniture,
textbooks, library books, uniforms, TLE, TLM, other
materials, supplies, commodities, etc.
(iii) Services Hiring of services including academic, technical
and resource support provided by institutions/organizations in
all areas, research studies, third party quality evaluation of
civil works, auditors etc.
The quality, timeliness, local appropriateness and affordability of
those procured inputs can largely determine whether the public
investments will succeed or fail. 5
 Effective Procurement

Objectives

Timely
Right Lowest Meeting Delivery Reliable
Right
Quality possible recognized as per suppliers
quantities
product price standards schedule

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 PROCUREMENT IN SSA
Strictly follow procurement procedure prescribed in Chapter IX of the
Manual on Financial Management and Procurement (FM&P).

Mandatory to follow the Manual provisions for all procurements under

SSA.

Follow States financial ceilings except when not prescribed by

MHRD.

Strictly follow MHRDs financial ceilings when ever prescribed for

various method of procurement which shall prevail on States ceilings.

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 Points to be kept in view
Identification of Needs.
Ensure availability of specific budget provision.
Assessment of bulk requirement at the beginning of the financial year.
Computer, equipment, furniture, books etc in economic lots as per
annual need.
Procure miscellaneous items of stores not covered by bulk requirement
as per actual need.
Make all purchases to the best advantage after comparison of
competitive prices.
Strictly follow the level of procurement prescribed in the Manual
Encourage decentralized procurement
Avoid centralized procurement of items prescribed at lower level
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 PROCUREMENT
Strictly follow the levels of procurement provided in
Para 112 of the Manual on FM&P

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School/KGBV level
All civil works, except buildings for Residential Schools/Hostels and
KGBV.
Furniture to Govt. UPS
Library Books for schools
Teaching Learning Material
School grant.
Maintenance grant.
Teaching Learning Equipment
REMS
Learning Enhancement Programme (LEP).
Items required for KGBV.
Uniform

Special Training related Items

TLM, Contingency etc. 10
CRC/BRC level
Furniture/ equipment/computer etc.

Office contingencies

Teaching Learning Material

Teacher Training

Community Training

Civil works for construction of BRC, augmentation of BRC

and CRC

Maintenance of BRC and CRC

Printing work

REMS
11
District level
Office equipment for DPO
Office furniture for DPO
Textbooks/other books/supplementary materials
Computers and accessories
Aids and appliances for CWSN
Office contingencies
Hiring of vehicles
Maintenance of equipment and vehicles
District level training and workshops
Printing work
REMS
ECCE Kit
Educational Kits for girls
Learning Enhancement Programme (LEP)
Construction of Residential Schools/Hostel and KGBV 12
State level
Textbooks
Computers and its accessories
Office equipment for SPO
Office furniture for SPO
Equipment for distance education
Aids and appliances for CWSN
Office contingencies
Hiring of vehicles
Maintenance of equipment and vehicles
State level training and workshops
Printing work
Engagement of consultancy firms (service contract)
Engagement of Auditors for external and internal audit
Engagement of experts/resource persons
Engagement of NGOs
REMS
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Learning Enhancement Programme (LEP).
 PART - II

(i) Method of Procurement

(a) Open Tender
(b) Limited Tender
(c) Single Tender
(d) Without Quotation
(e) Through Community
(ii) Steps involved in various method of Procurement
(iii) Major Procurement in SSA

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 Method of Procurement

Method of
Procurement

Open Limited Single Procurement Procurement

Tender Tender Tender without through
tender / communities
quotation

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 OPEN TENDER
Meaning

Competitive bidding procedure and is the most efficient and

economic way of procuring goods or works.

Provides for adequate competition in order to ensure reasonable

prices.

Ensures transparency and equal opportunity to all.

The methods used in the evaluation and the award of contracts are
made known to all bidders.

Items covered
Civil works construction of BRC, Residential schools / Hostel,
KGBV, SIEMAT and any other civil works specifically approved by
Project Approval Board through contractors.
Goods 16
 OPEN TENDER
Steps
Preparation of tender documents
Notification / Advertisement;
Issue of tender documents;
Pre-bid Conference
Submission of tender documents;
Public opening of tender;
Evaluation;
Selection of lowest evaluated responsive bidder based on
post qualification;
Negotiation with L-1 (if necessary)
Contract award; and
Contract performance 17
Tender documents:
Should be user friendly, self contained, comprehensive, unambiguous
and relevant to the objective of purchase.
Use Standard State Governments tender documents duly modified, if
necessary, to cover the following sections:
Section - I Invitation for Bids (IFB)

Section - II Instructions to Bidders (ITB)

Section - III General Conditions of Contract
Section - IV Special Conditions of Contract
Section - V Schedule of Requirements
Section - VI Technical Specifications
Section - VI-A Post Qualification Criteria
Section - VII Bid form and Price Schedule
Section - VIII Bid Security Form
Section - IX Contract Form 18
 Section - X Performance Security Form
Section - XI Performance Statement
Section - XII Manufacturers Authorization Form
Section - XIII Form for Bank Guarantee for Advance Payment
Section - XIV Performa for Equipment and Quality Control
employed by the Manufacturer

Important Clauses:
Notification of Tender Notice

Sale of tender documents

Schedule of requirement
Bid Form
Bid Prices
Technical Specifications
Post-Qualification Criteria
Bid Validity Period 19
 Earnest Money
Pre-bid Conference
Signing of Bids
Submission of bids
Opening of bids
Evaluation criteria
Negotiation with L1
Award of contract
Security deposit
Retention money
Signing of agreement/contract
Payment terms
Adjudicator
Force Majeure
Liquidated damages
Corrupt or Fraudulent Practices
General Conditions of Contract (GCC) 20
Special Conditions of Contract (SCC)
 Procurement Steps
Notification of Tender Notice
Timely notification of bidding opportunities is essential in
competitive bidding.
Invitation to bid to be published in newspapers, and at least in one
national English daily, if value is more than ` 20 lakh.
While a gist of the notification is published in the news paper
detailed notification be uploaded on State SSAs website.
Notification should cover:
Cost of bidding documents and mode of payment
Details of goods / equipment /works, quantity, delivery/
completion date
Date of commencement and last date for sale of bidding
documents
 Procurement Steps
Notification of Tender Notice
Last date and time for receipt of bids
Time and date of opening of bids
Place of opening of bids
Address for communication
Earnest Money and its mode of payment
Last date for receipt of tender documents
The day following the date for close of the sale of tender
documents.
Tendering period
Not less than 30 days from the date of sale of tender
documents.
 Procurement Steps
Sale of Tender Documents
Begin only after publication of notification of tender.
Close one day prior to the last date for receipt of tender.
Prescribe a reasonable cost. Levy additional charges in case of
sending by post or courier.
Allow to down load from web site, subject to payment of the
prescribed cost of the tender documents while submitting it.
Non-refundable cost in the form of a Demand Draft / Bankers
Cheque on any Nationalized/Scheduled bank in favor of the
purchaser/employer
Not transferrable from one bidder to another
All associated cost borne by the bidder
 Procurement Steps

Schedule of Requirement
Use the prescribed format given in the bidding documents

Clearly specify the work to be carried out, location, goods to be

supplied, place of delivery / installation, schedule of delivery /
completion, earnest money deposit, minimum performance requirement,
warranty and maintenance requirement and other terms & conditions
Prepare based on the items to be procured

Include similar items in one schedule or package, include dissimilar

items in separate schedule or package
 Procurement Steps
Bid Form

Use the prescribed form given in bid documents

Indicate brief description of the goods / equipment / work, quantity

and bid price

This is an undertaking given by the bidder to the purchaser on the

acceptance of the conditions and the bid validity period

Signed by the bidder or his authorized representative holding power

of attorney

Unsigned bids not to be accepted

 Procurement Steps
Bid Prices
Indicate the unit price, total bid price including taxes and duties,
transportation and other incidental charges for the total quantity
required in the price schedule
Allow to submit bids for any one or more schedule/package in the case
of multiple schedule/package and offer discounts for combined
schedules/packages
Should quote the complete requirement specified under each
schedule/package failing which such bids need not be considered
Remain fixed during the currency of the contract unless in the case of
civil works where prices may vary as per the variation orders issued
Reject all adjustable price quotations
Need not consider offer of any conditional discounts
In the case of discrepancy between unit price and total price, unit price
shall prevail.
In the case of discrepancy between amount in figures and words,
amount in words shall prevail.
 Procurement Steps
Technical Specifications
Prescribe technical specifications in Annex IV of the Bid Documents,
required for each item after carrying out the market survey to ascertain
updated version of that item.
Ensure clarity while drawing specifications
Typical technical specifications of Text Books are given in Annex-I.
Use the internationally or nationally accepted standards
Based on relevant characteristics and / or performance requirements
Avoid references to brand names, catalogue numbers or similar classifications
In case brand name or catalogue number is necessary to quote, add the words
or equivalent
Permit the acceptance of offers which have similar characteristics and provide
performance at least substantially equivalent to those specified
Define the test, standards, and methods that will be employed to judge the
conformity of equipment as delivered, or works as performed, with the
specifications
Deviations not allowed after opening of bids
 Procurement Steps
Documents Establishing Technical Qualifications

Documentary evidence of conformity in the form of literature,

drawings and data which consist of :
a detailed description of the essential technical and performance
characteristics of the goods ;
a list giving full particulars, including available sources and current
prices, of spare parts, special tools, etc., necessary for the proper
and continuing functioning of the goods for a period of three years,
following commencement of the use of the goods by the purchaser;
and
an item-by-item commentary on the purchasers Technical
Specifications demonstrating substantial responsiveness of the
goods and services to those specifications or a statement of
deviations and exceptions to the provisions of the Technical
Specifications.
 Procurement Steps
Documents Establishing Technical Qualifications

For purposes of the commentary to be furnished, the Bidder

shall note that standards for workmanship, material and
equipment, and references to brand names or catalogue
numbers designated by the purchaser in its Technical
Specifications are intended to be descriptive only and not
restrictive.

The Bidder may substitute alternative standards, brand names

and/or catalogue numbers in its bid, provided that it
demonstrates to the purchasers satisfaction that the
substitutions ensure substantial equivalence to those designated
in the Technical Specifications.
 Procurement Steps

Post-Qualification Criteria

Prescribe in the Annexure given in the bidding documents.

Typical post qualification criteria is given in Annex-II.
Provide documentary evidence to establish post- qualification
Manufactures authorization in case the bidder himself is not the
manufacturer;
Ensure financial, technical and production capability necessary to
perform the contract
 Procurement Steps
Bid Validity Period

Remain valid for 90 days after the date of bid opening

Reject the bids in case of shorter period of bid validity
In case delay anticipated for completing the formalities of
evaluation and award of contract extension of bid validity with the
consent of the bidders
Seek extension of validity of earnest money deposit in the case of
extension of bid validity period
No price variation
No forfeiture of earnest money in case the bidder refuse for the
extension
 Procurement Steps
Earnest Money (Bid Security)
To protect the purchaser against the risk of bidders conduct which would
warrant forfeiture of earnest money
Amount - 2 % of the estimated contract value indicated in fixed amount
for all prospective bidders
Method of payment - bank guarantee, irrevocable letter of credit,
demand draft or bankers cheque issued by a Nationalized/scheduled
bank
Date of Deposit - after the date of notification of the bid
Validity Period - 45 days beyond bid validity period of the bid
Reject the bids, if, not accompanied by the requisite amount, not
covering the validity period and not adhering to the mode of payment
Return to unsuccessful bidders soon after the final acceptance of bid
Adjustment in the case of successful bidders against security deposit
(performance security)
Forfeiture - withdrawal of bids during bid validity, non acceptance of
correction of arithmetic errors, failure to sign the contract, not furnishing
security deposit within the stipulated time by the successful bidders
Not forfeited in case of refusal for the extension of bid validity period
 Procurement Steps
Pre-bid conference
Arranged by the purchaser/employer as per the notification to provide
clarifications on the provisions of the bidding documents to the
prospective bidders.

Bidders can seek the clarifications in writing well in advance before

the scheduled date

Issue addendum, if needed as a result of the pre-bid conference, well

in time to enable the bidders for compliance

In case sufficient time is not available, extend the tendering period

Furnish the minutes of the pre-bid conference along with the

addendum to all bidders who had purchased the bids and also along
with the bid documents to the bidders purchasing the documents
subsequently.
 Procurement Steps

Signing of Bids

Signed by the bidder or his representative who is authorized to do

so by a power of attorney which should be attached with the bid

Bid in original in conformity with the bid documents

All corrections be signed with date

All pages of bid documents be signed

 Procurement Steps
Submission of Bids
Bids typed or written in indelible ink and sign by the bidder or his
representative, authorized by a power of attorney (attach with the bid).
Single Envelope System: Submit both the technical and financial bid
along with earnest money deposit in a single envelop.
Double Envelope System: Submit the technical and financial bids in
separate envelopes along with earnest money deposit indicating on
each envelope Technical Bid or Financial Bid as the case may be.
Seal the original and copy of bid in separate inner envelopes and then
place all the inner envelopes in outer envelope and seal.
Address both the envelopes to the purchaser indicating Do not open
before _______ hours on________.
Sent by post/courier or dropped in person in the bid box placed in the
purchasers office.
Bids received after deadline need not be considered and returned
unopened.
Reject Bids sent by e-mail or fax.
Accept only one bid from one bidder.
 Procurement Steps
Deadline for submission of bids
Bids must receive within the time and date specified in the invitation
for bids.
In the event of the specified date for submission of bids being
declared a holiday, the bids will be received up to the specified time
on the next working day.
The purchaser may extend this deadline by amending the bid
documents which will be strictly adhered to by the purchaser and
the bidder.

Late Bids
The bidder should ensure timely submission of bids.
Any bids received after the prescribed deadline shall be rejected
and returned to the bidder unopened.
 Procurement Steps
Opening of Bid
Follow the procedures described in the Instructions for Bidders (IFB).
Open in public in the presence of bidders or his authorized
representatives ( maximum 2) who choose to attend the bid opening
process.
The authorized representatives must carry an authorization letter from
the bidder.
Strictly follow the date, time and place of bid opening specified in the
IFB
Open immediately after the deadline for submission of bids but not
exceed more than one hour from the deadline for submission of bids.
In the event of the specified date for opening of bids being declared a
holiday, the bids will be opened up to the specified time and location
on the next working day.
Obtain the signature of the bidder or his authorized representatives
who are present for having attended the bid opening.
 Procurement Steps
Manner of Opening the bids
The Purchase Committee shall count the number of bids received
and allot numbers to each bid based on the total number of bids.
If 10 bids are received, the numbers will be allotted as 1/10, 2/10,
3/10 and so on.
All the members of the Committee shall initial with date on the outer
cover of all the bids.
In case the envelopes containing the bid offer are not properly
sealed, such bids need not be opened and rejected outright.
The reasons for not opening such bids shall be recorded on the
face of the envelope and all the members of the Committee shall
initial with date.
Read out at the bid opening, the bidders name, bid modifications or
withdrawals, bid prices, discounts, and the amount of earnest
money deposit.
 Procurement Steps
Manner of Opening the bids
No bid shall be rejected at bid opening except those received after
the deadline for receipt of bids and unsealed bids which shall be
returned to the bidder unopened.
Prepare a summary of the read out bid prices as per the format
given in Annex-III.
All members present in the bid opening must sign with date all
pages of the bid documents, and the supporting documents
submitted by the bidder except printed materials.
Prepare the Minutes of the bid opening.
To assist in carrying out the opening and preparing of the record, a
bid opening check list is provided in Annex-IV.
 Procurement Steps
Clarification of bids

Request clarifications of bidders on ambiguities or inconsistencies,

if any, in bid.
During evaluation, if clarifications considered necessary, seek from
the bidder in writing, indicating time limits for submission of the
response.
Not to seek or accept any change in the price or scope of the
originally offered goods, works, or services except for the correction
of arithmetic errors.
The bidder shall submit the clarifications in writing within the
specified time limit.
No circumstances shall justify meetings or conversations between
the purchaser and bidders during the bid evaluation process.
 Procurement Steps

Evaluation of Bids
Preliminary Examination of Bids
Begin immediately after bid opening the evaluation process.
The purpose of preliminary examination is to identify and reject bids
that are incomplete, invalid, or substantially non-responsive to the
bidding documents and therefore are not to be considered further.
Such bids shall not subsequently be made responsive by correction
or withdrawal of the non conforming deviation or reservation.
Carry out the following checks:
 Procurement Steps
Verification
Attention should be given towards deficiencies that, if accepted,
would provide unfair advantages to the bidder.

Sound judgment must be used: for example, simple omissions or

mistakes arguably occasioned by human error should not be
grounds for rejection of the bid.

Rarely is a bid perfect in all respects. However, the validity of the

bid itself, for example, its signatures, must not be in question.

If the bidder is an agent, an authorization from the supplier or

manufacturer must be provided in addition to any documentation
required of the supplier or manufacturer itself.
 Procurement Steps
Earnest Money Deposit
Must conform to the requirements of the ITB, and it must
accompany the bid.

If the earnest money deposit is issued as a bank guarantee, it must

be consistent with the wording of the bid security form provided in
the bidding document.

Submission of a copy of the security or submission of a counter-

guarantee naming the purchasers bank instead of the purchaser is
unacceptable.

Deposit for an amount smaller or for a period shorter than the one
specified in the IFB, not in conformity with the form and bank
specified in ITB are not acceptable.
 Procurement Steps
Completeness of Bid

Unless the bidding documents have specifically allowed partial bids

permitting bidders to quote for only select items or for only partial
quantities of a particular itembids not offering all of the required
items should ordinarily be considered non-responsive.

However, under works contracts, missing prices for occasional work

items are considered to be included in prices for closely related
items elsewhere.

If any erasures, interlineations, additions, or other changes have

been made, they should be initialed by the bidder.

Missing pages in the bids shall be a cause for rejection of the bid.
 Procurement Steps
Substantial Responsiveness

A substantially responsive Bid is one which conforms to all the

terms and conditions, and technical specifications prescribed in the
bidding documents, without material deviation or reservation.

Major deviations to the commercial requirements and technical

specifications are a basis for the rejection of bids.

As a general rule, major deviations are those that, if accepted,

would not fulfill the purposes for which the bid is requested, or
would prevent a fair comparison with bids that are properly
compliant with the bidding documents.
 Procurement Steps
Examples of major deviations include:
Stipulating price adjustment when fixed price bids were called for
Failing to respond to specifications by offering instead a different
design or product that does not offer substantial equivalence in critical
performance parameters or in other requirements
Phasing of contract start-up, delivery, installation, or construction not
conforming to required critical dates or progress markers
Sub-contracting in a substantially different amount or manner than that
permitted
Refusing to bear important responsibilities and liabilities allocated in
the bidding documents, such as performance guarantees and
insurance coverage
Taking exception to critical provisions such as applicable law, taxes
and duties, and dispute resolution procedures
Those deviations that are specified in the ITB as requiring rejection of
the bid (such as, in the case of works, participating in the submission of
anothers bid other than as a subcontractor).
 Procurement Steps

The results of preliminary examination should be presented in Annex-V.

If the bid fails preliminary acceptance, the reasons must be clearly
explained in footnotes or in an attachment, as necessary

Detailed Preliminary Examination

A typical Checklist for the detailed preliminary examination of the bid is
given at Annex-VI.
Reject the bids determined as non-responsive in the check list.

Technical Evaluation
In combined bids invited in one envelope system, the technical
evaluation will be carried out simultaneously by a Technical Committee
constituted for this purpose.
The ranking system by allotting marks will not be followed in the case of
technical evaluation of goods/equipment and works.
 Procurement Steps
The Technical Committee will examine the bids with reference to the
technical specification specified in Annexure of the bidding
documents and comment on the responsiveness of the technical
specifications.
Reject the bids which do not conform to the technical specifications
specified in the bidding documents.
The format to ascertain responsiveness to technical aspects is
provided in Annex-VII.
In double envelope system, the evaluation of technical qualification
is carried out first and financial evaluation is done only the bids that
qualifies technical qualification.

Evaluation and comparison of substantially responsive bids

Only those bids surviving preliminary examination need to be
examined in this phase.
The purchaser reserves the right to accept or reject any variation,
deviation, or alternative offer.
 Procurement Steps
Variations, deviations, and alternative offers and other factors which
are in excess of the requirements of the Bidding documents shall not
be taken into account in bid evaluation.
If the Bid of the successful Bidder is seriously unbalanced in relation to
the purchasers estimate of the cost of goods/equipment to be
supplied under the contract, purchaser may require the Bidder to
produce detailed price analysis of ex-factory/ex-warehouse/off-the-
shelf price of the goods offered, such price to include all costs as well
as duties and taxes paid or payable, cost of incidental services,
transportation, insurance etc.

Determination of post qualification criteria

The purchaser will determine to its satisfaction whether the Bidder that
is selected as having submitted the lowest evaluated responsive
bidder meets the post qualification criteria specified in the Annexure of
ITB and is qualified to perform the contract satisfactorily.
The determination will take into account the Bidder's financial and
production capabilities.
 Procurement Steps
It will be based upon an examination of the documentary evidence of
the Bidder's qualifications submitted by the Bidder as well as such
other information as the purchaser deems necessary and
appropriate.
A typical check list for the determination of post qualification criteria
is given in Annex-VIII. This may be modified suitably in conformity
with the post qualification criteria prescribed in Annexure of ITB used
for the procurement.
If the lowest evaluated bidder fails post qualification, its bid should
be rejected, and the next ranked bidder should then be selected
subject to fulfillment of post qualification.
If successful, this bidder should receive the award. If not, the
process will continue.
The rejection of a bid for reasons of post qualification requires
substantial justification, which should be documented in attachments
to the bid evaluation report.
 Procurement Steps
Negotiation
In exceptional cases the purchaser may undertake negotiation with
the lowest evaluated responsive bidder (L1)

Inform the bidders in writing to attend the negotiation proceedings in

the appointed time by giving sufficient time to attend

In case the rates even after negotiation are very high , invite fresh
bids after rejecting all bids

Inspection
Premises inspection - In case the purchaser desired to carry out the
inspection of the premises of the supplier/contractor, the same may
be carried out before the award of contract.
 Procurement Steps
Performance Testing Test at the suppliers premises on test
stands on measured data, corrected data and calculated
performance value, compared with specifications.

Packing and Marking Inspection Verification of equipment before

packing, checking of packing material, fixation, protection,
desiccators, handling signs and documentation.

Supervision of Loading Verification of packing material,

cleanliness of container/truck/rail car, loading operation, stowing,
fastening, protection and transport documents.

Commissioning Testing Check the testing program, the

equipment, measuring instruments and testing methods. Reporting
performance test results.
 Procurement Steps
Repeat Orders
Quantity increase/decrease as per State procedure
Place order within one month from the date of last supply
Prices have since not reduced
Purchases not made on urgent basis

Right to Accept any Bid or Reject all Bids

The purchaser has the right to accept or reject any bid and to annul
the bidding process and reject all bids at any time prior to award of
contract.

Rejection of all bids

Lack of competition
Tenders not substantially responsive
Review the causes justifying the rejection
Obtain the approval of competent authority
 Procurement Steps
Award of Contract

Award Criteria
Award the contract within the bid validity period.
Award the contract to the successful lowest evaluated responsive
bidder
The selected bidder need not undertake work not specified in
bidding documents or to modify his bid.

Single offers received:

Consider if;
publicity was adequate,
bid specifications / conditions were not restrictive or unclear
and bid prices are considered reasonable.
 Procurement Steps

Notification of Award (Para 26.2)

Within the bid validity period the purchaser may notify the
successful bidder in writing on the acceptance of bid which will
constitute the formation of contract

Upon furnishing of security deposit by the successful bidder notify

promptly each unsuccessful bidder and discharge their earnest
money deposit.
 Procurement Steps
Contract Document
Define the following clearly in the contract document
the scope of work to be performed:
the goods to be supplied
the rights and obligations of the purchaser and of the contractor or
supplier
the functions and authority of the engineer, if one is employed by
the Purchaser in the supervision and administration of the
contract.
Use the format of contract given in Annexure of the bidding documents
Documents forming an integral part of the agreement:
the Bid Form and the Price Schedule submitted by the Bidder;
the Schedule of Requirements;
the Technical Specifications;
the Purchasers Notification of Award.
approved rates, purchase order/ work orders and other
instructions issued by the Purchaser.
 Procurement Steps
Security Deposit
5% of the contract value to protect the implementing agency in
case of breach of contract by the contractor/supplier.
Refund within one month of the completion of supply of goods/
works or on the expiry of guarantee/ warranty/maintenance period.
Forfeited in case the bidder fails to make complete supply
satisfactorily or complete the work in time.

Retention Money
In the case of civil works contract - 5% of contract price
Retained 50% till completion of the work and
Retained 50% till the end of the defects liability or maintenance
period
 Procurement Steps
Signing of Agreement
On acceptance of the bid, the Purchaser notifies the successful
bidder and send the bidder the prescribed Contract Form,
incorporating all agreements between the parties

Within 21 days of receipt of contract form, the successful bidder will

sign the contract and returns to the purchaser

On signing of the agreement the same will constitute the award of

contract on the bidder.

The contractor/supplier will have to bear all relevant expenses in

connection with signing of agreement including the purchase of
stamp papers.
 Procurement Steps

Corrupt or Fraudulent Practice

Bidders to observe highest standard of ethics during the
procurement and execution of contract;

Corrupt practice means offering, giving, receiving or soliciting

anything of value to influence the action of officials in the
procurement process;

Fraudulent practice means a misrepresentation of facts in order to

influence a procurement process or the execution of a contract or
collusive practice among bidders designed to establish bid prices
at artificial non-competitive level to deprive the purchaser of the
benefits of free and open competition;

Such bids will be rejected and declare the bidder ineligible for
further award of contract financed by the purchaser.
 Procurement Steps
General Conditions of Contract (GCC):
Follow the provisions of the General Conditions of Contract prescribed
in the bidding documents
Special Conditions of Contract (SCC).
Follow the provisions of the Special Conditions of Contract prescribed
in the bidding documents
Adjudicator
Appointed jointly by the purchaser and bidder to resolve disputes in the
first instance.
Disputes or differences shall be settled in accordance with the
Arbitration and Conciliation Act, 1996.
Consist of three Arbitrators, one is to be appointed by the purchaser
and the bidder, the third shall be chosen by the two Arbitrators so
appointed who will be the presiding Arbitrator.
If one of the parties fails to appoint its Arbitrator within 30 days after
receipt of the notice of the appointment of its Arbitrator by the other
party, then the presiding Arbitrator shall be nominated by Indian Council
 Procurement Steps
Delivery and Damages
Delivery of the goods shall be made by the Supplier in accordance
with the terms specified by the Purchaser in the notification of the
award.
The documents to be furnished by the Supplier are given below:
(i) .......... Copies of the Supplier invoice showing contract
number, goods' description, quantity, unit price, total amount;
(ii) Railway receipt/road transport receipt/airway bill/bill of lading
and acknowledgment of receipt of goods from the consignee(s);
(iii) Insurance Certificate;
(iv) Manufacturer's/Supplier's warranty certificate;
(v) Inspection Certificate issued by the nominated inspection
agency, and the Supplier's factory inspection report; and
(vi) Certificate of Origin their representatives.
 Procurement Steps
Terms of Payment
The method and conditions of payment to be made to the Supplier are
given in Special Conditions of Contract.

Typical terms of payment

Advance Payment:
Pay 10% of the Contract Price within 7 days of signing of Contract on
a simple receipt.
Obtain a bank guarantee for the equivalent amount valid until the
Goods are delivered.
On Delivery:
Pay 80% of the contract price on receipt of Goods and upon
submission of the requisite documents
On Final Acceptance:
Pay the remaining 10% of the Contract Price within 30 days after the
date of the acceptance certificate issued by the Purchasers
representative for the respective delivery.
 Procurement Steps
Liquidated Damages

Include in the conditions of contract to levy damages for:

Delay in delivery of goods;
Delay in completion of works;
Failure of the goods or works to meet performance requirements
@ 0.5% per week of the contract value and a maximum of10% of the
contract value.
 Procurement Steps

Force Majeure

Clause 23 of the GCC provides Force Majeure conditions.

In case of natural calamities or an event beyond the control of the

supplier/contractor the delay in performance will not forfeit the
performance security or will not charge liquidated damages.

In such situations the supplier/contractor will notify the purchaser in

writing and continue to perform its obligations under the contract as
far as it is reasonable practical and seek all reasonable alternative
means for performance not prevented by force majeure.
LIMITED TENDER
Items covered:
Goods including books, uniforms
Teaching learning materials,
School equipment,
Hiring of vehicles, and
Operation and maintenance of equipment

Invitation for quotations

Based on comparing price quotations obtained from several

suppliers, usually at least 3 to ensure competitive prices.

Issue a letter to the supplier to furnish the quotations for the required
goods/equipment.
65
LIMITED TENDER
Invitation for quotations
No need of publication of notification in the newspaper/website.
Issue the request letters to suppliers on the approved list.
The request letter should indicate description, specifications and
quantity of the goods as well as desired delivery time and place.
Only one quotation by each supplier.

Bid Price
Quote for the full quantity as described in the invitation letter.
Corrections, if any, made by crossing out, dated initialing and re-writing.
Include all duties, taxes and other levies payable by the
Vendor/Supplier in the total price.
The rates quoted by the Vendor/Supplier be fixed for the duration of the
contract and not subject to adjustment on any account.
The prices are quoted in Indian Rupee.
 LIMITED TENDER
Steps
Identifying items;
Laying down specifications;
Estimating total numbers and costs of items;
Need not notify in newspaper/website
Identifying likely agencies borne on the approved list of
contractors/ suppliers; (minimum 3, 8-10 for more competitive
rates)
Obtaining approvals of competent authority;
Issuing letters of invitation;
Processing quotations received;
 Obtaining orders of competent authority for placing orders for
supply;
Issuing letters placing orders for supply and delivery period;
Quoted price shall include all duties, taxes and other levies;
Rates quoted be fixed and not subject to adjustment;
Ensuring inspection;
Ensuring timely supply: and
Making payments after delivery in satisfactory condition.
The financial ceiling prescribed for limited tender shall be applicable
for Rate contracts of DGS & D and Rate contracts of State
Governments.
 SINGLE TENDER
Followed in the case of
Articles specifically certified as of propriety nature; or
Manufactured by a particular firm;
Goods including books;
Teaching materials;
School grant;
Hiring of vehicles; and
Operation and maintenance of equipment etc
Appropriate for
Extension of existing contracts
Standard equipment/spare parts for existing equipments from original
supplier.
Items obtainable from one source
Early delivery
In exceptional cases such as natural disaster.
 WITHOUT TENDER / QUOTATION
Procurement of goods or group of goods estimated to cost the
equivalent of the ceiling of State Govt.
Issue suitable guidelines by the SIS

THROUGH COMMUNITIES
Construction of all civil works except, BRC, Hostel, KGBV and SIEMAT
BRC construction if the community is technically capable
Purchase of materials as per ISI certification, if available;
SPD may provide simple procurement guidelines
 Identify the committee locally operating in the area.
Keep the following points in view:
Active involvement of community in planning and
implementation;
Who will procure the materials or goods used in
works;
Goods / works have to be executed as per
approved plans and specifications
The name and designation of the Engineer for
technical supervision and certification.
 Suggested advance payments based on the certificate
issued by the Supervising Engineer

Advance (mobilisation advance

upon start up of the work and
on reaching lintel level) : 75% of total cost
Plastering and completion of
work : 25% of total cost
School toilet and other repair works

Advance (mobilisation advance

upon start up of the work) cost : 75% of total

Plastering and completion

of work cost : 25% of total
 Procurement of major items

Textbooks Single Tender (Textbooks Corporation,

NCERT etc) and Open Tender
IT Equipment Limited Tender (State approved
vendors)
State Electronic Corporation/IT Deptt/other State
agencies provided they follow State procedure and
Manual provisions
Open Tender and e-procurement
Printing work Rate Contract approved by State
Government, Limited Tender and Open Tender
 PART - III

(i) Service Contract

(ii) Selection of NGOs
(iii) Post Review
(iv) Mis-Procurement
(v) Complaint Handling Mechanism
(vi) Key Observations
Service Contract

Considerations
 Service Contract
Selection process
Preparation of Terms of Reference
Preparation of Cost Estimate and Budget
Advertisement, seeking Expression of Interest (EOI)
short listing of consultants/firms based on EOI
Issue of Request for Proposal (RFP) to short listed
Consultants/firms.
Receipt of RFP in two envelope system, technical and financial
proposals separately.
Formation of Evaluation Committee
Evaluation of Technical proposal and assign individual mark by
each member on the basis of responsiveness to the TOR
Open the Financial proposals of the qualifying Consultants
publicly in the presence of the Consultants/representatives
Final discussions including negotiations
Award of contract
 Service Contract
Terms of Reference (TOR)
Prepare a well-defined TOR specifying the services to
be provided on the following lines:
Background information;
A precise statement of objectives;
An outline of tasks to be carried out;
A time schedule for completion of tasks;
The support/inputs provided by the Client;
Composition of Review Committee to monitor the services;
List of key personnel whose CV and experience would be
evaluated.
 Service Contract
Preparation of Terms of Reference
Preparation of Cost Estimate and Budget
Advertisement, seeking Expression of Interest (EOI)
short listing of consultants/firms based on EOI
Issue of Request for Proposal (RFP) to short listed
Consultants/firms.
Receipt of RFP in two envelope system, technical and financial
proposals separately.
Formation of Evaluation Committee
Evaluation of Technical proposal and assign individual mark by each
member on the basis of responsiveness to the TOR
Open the Financial proposals of the qualifying Consultants publicly
in the presence of the Consultants/representatives
Final discussions including negotiations
Award of contract
Performance of contract
 Service Contract
Cost Estimate and Budget
Based on the assessment of resources needed to carry out the
assignment, staff time, logistical support and physical inputs.
Costs divided into two broad categories (a) fee or remuneration
and (b) reimbursable.
Ensure that the requested services are within the current
financial budget.
Advertising
Not necessary for short term consultancy services.

Advertisement seeking Expression of Interest for other services,

is published in regional and national newspapers having wide
circulation and uploaded in the web site of the Client.
Specify requisite qualifications, experience etc. in the
notification.
 Service Contract
Short list of Consultants
Short list the Expression of Interest received based on the
relevant qualifications and experience specified in the
notification.
Receipt of proposals
Issue letter of Invitations along with the TOR to the short listed
consultants/firms.
Seek proposals from the short listed consultants / firms in two
envelope system i.e, technical proposal in one envelope and
financial proposal in another envelope.
Evaluation Committee
Constitute evaluation committees separately for technical and
financial evaluation
This committee will evaluate the proposals received from the
consultants / firms
 Service Contract
Evaluation
Carried out in two stages, first the quality and then the cost
Until the technical evaluation is concluded the evaluators of
technical proposals will not have access to the financial
proposal
Evaluation of Technical Proposal
Carried out on the basis of the responsiveness to the TOR.
The technical evaluation committee will prepare an evaluation
report on the technical aspects of the proposal.
The report shall substantiate the results of the evaluation and
describe the relative strength and weaknesses of the
proposals.
Individual marks will be assigned by each member and a
consolidated mark sheet is prepared.
Minimum qualifying marks should be provided in the Letter of
Invitation and those who are not obtaining this will be
disqualified 81
 Service Contract
Evaluation of Financial Proposal
On completion of technical evaluation, notify those
consultants whose proposals did not meet the minimum
qualifying marks that their financial proposals will be returned
after completing the selection process.
Simultaneously notify the consultants who have secured the
minimum qualifying marks and intimate the date and time set
for opening the financial proposal.
Allow sufficient time for attending the opening of financial
proposals
The financial committee shall open the financial proposal
publically in the presence of representatives of the
consultants / firms who choose to attend.
Read aloud the name of the consultant / firm, the quality
scores and the proposed prices when the financial proposals
are opened
Prepare the minutes of the public opening.
 Service Contract
Final discussions (negotiations)
Held with the selected consultant /firm on the following issues

The selected consultant /firm shall not be allowed to

substitute key staff unless both parties agree that undue
delay in the selection process makes such substitution
unavoidable or that such changes are critical to meet the
objectives of the assignment.
Financial discussions shall include in addition to fee /
remuneration, clarification of the consultants / firms tax
liability and how this tax liability shall be reflected in the
contract.
In case these discussions fail to result in an acceptable
contract, terminate the process and invite the next ranked
consultant / firm for discussion
After the process is successfully completed, promptly
notify other consultants /firms on the short list that they
were unsuccessful
 Service Contract

Award of Contract

Award the contract to the selected consultant / firm

Use the prescribed contract agreement form for signing the
contract
Indicate the fee/remuneration negotiated with the selected
consultant/firm to be paid for the services in the contract
agreement and also the terms of payment
 Non-Government Organizations
Preparation of Terms of Reference
Publication of advertisement
Formation of Evaluation Committee
Short-listing of NGOs on the basis of specifications and scope of
the work specified in the TOR.
Desk appraisal and if found suitable, field appraisal by the
Evaluation Committee
Recommendation by the Evaluation Committee for the selection
of NGOs to the Grant-in-Aid Committee.
Approval by Grant-in-Aid Committee based on the report of the
Evaluation Committee on the desk and field appraisal.
 PROCUREMENT

Post Review
Government of India or the funding agencies shall undertake
post review of the contracts awarded on procurement of goods,
works and services on a random basis.
All procurement documents should be retained and made
available to the review team.

Mis-procurement
Goods, works and services that have not been procured as per
the Manual shall be treated as mis-procurement and SSA funds
cannot be used for such procurement.
 PROCUREMENT

Complaint Handling Mechanism

Set up complaint handling mechanism at national as well as State
level to deal with complaint received from contractors/suppliers.
Dealt with at a level higher than that of the level at which the
procurement process is being undertaken
Undertake a thorough enquiry of the allegations made
If found correct, take appropriate remedial measures
Initiate disciplinary proceedings against the delinquent staff
Receipt of any illegal gratification by staff is considered as
misconduct and result in disciplinary proceedings against such
staff, in addition to imposing penalties under the law.
Key Observations of Post review of Procurement

Review revealed :
need for tightening of procurement system especially on
procedural lapses
incomplete documentations
irregularities
diversions of funds
Procedural lapses
Not issued solicitation letters to the vendors for obtaining
quotations.
obtained Quotations by hand by visiting the premises of
the vendors.
In some cases, notice inviting quotations being put on the
notice boards of SSA offices.
In some cases, L1, L2 and L3 share the same address and
telephone number.
Key Observations of Post review of Procurement
Procedural lapses
Engagement of contractors for construction of civil
works without obtaining the prior approval of PAB.
Non observance of the time limit of 30 days for
submission of bids.
Letter of award issued within 20 days, even though 30
days time limit was allowed for submission of bids.
Entire procurement cycle completed within 2 days.
Invoice date is prior to the purchase order date.
Cheques drawn prior to the issue of purchase order.
Splitting of orders to bring it within the financial
ceiling.
Contract amount exceeded without issue of repeat
orders or revision of contract agreement.
Not indicated Bid validity period in the bid 89

documents.
Key Observations of Post review of Procurement
Procedural lapses
Procured goods not taken in the fixed asset register.
Procured goods not found at site during visit.
Followed single tender instead of limited tender.
Followed limited tender instead of open tender.
Not taken Earnest money deposit from prospective
bidder.
Not indicated validity period of the earnest money
deposit in the tender documents.
Not obtained Security deposit/performance guarantee
from selected bidders.
Delay in delivery period stipulated in the PAB.

Made payment based on provisional bill.

The date issued for work order and the 90

delivery/invoice/payment dates on the same day.

Key Observations of Post review of Procurement
Procedural lapses
Not indicated validity period of the earnest money
deposit in the tender documents.
Not obtained Security deposit/performance guarantee
from selected bidders.
Not contain clauses for liquidated damages, security
deposits, retention money, delivery schedule and
payment schedule in Work Orders .
Not charged Liquidated damages though stipulated in
the purchase order.
Not published advertisement in national news paper
for open tender valuing more than Rs. 20 lakh.
Not clearly specified Technical specifications, delivery
period, payment terms etc in the tender documents. 91
 Key Observations of Post review of Procurement

Lack of training on Procurement

The Head Masters were not aware of the prescribed procurement
procedures under SSA.
Poor understanding of procurement procedures at State and
district level.

Irregularities in Procurement
Dates of all bids received were overwritten except the winning
bidder.
Vehicle providers had formed a cartel in the award of contracts
for hiring of vehicle.
Not selected Lowest bidder in a limited tender for construction of
additional class room on the ground of his inability to handle the
construction involving negotiation with second lowest bidder.
92
Key Observations of Post review of Procurement

Irregularities in Procurement
Selected same contractor on single source basis in two
schools.
Purchased Computers from agencies not on authorized
DGS&D or State Government Rate contract entities.
Assets procured were not available for physical verification.
Absence of concerned staff during the course of review
despite prior notification of the visit.

Diversion of funds
Used ACR fund for the construction of library

93
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